Energy System Integration Projects Go Mega in Mesoamerica

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Researched by Industrial Info Resources (Sugar Land, Texas). “This will represent the largest investment in the isthmus area (Central America) since the building of the Panama Canal,” said President Eduardo Fox of Mexico on the announcement of a project to build a mega-sized, world-class oil refinery, while at the Mesoamerican Energy Integration Project (PIEM) launch.

Ten Latin American countries, led by Mexico and Colombia agreed at the second PIEM Summit in La Romana, San Domingo, Dominican Republic, to build a $6.5 billion, 360,000-barrel per day (bpd) oil refinery that will be an anchor project for an overall regional energy project consisting of a thermal power station, a hydroelectric dam and a gas pipeline traversing territory between Mexico and Panama. A liquefied natural gas plant is also covered in the scope of the project planning.

Oil to feed the project will primarily come from Mexico, with 66% of the feed and the balance coming from Guatemala and Belize. With unidentified private investors expected to fund the project, the site for the refinery will be selected by the Inter-American Development Bank on a basis of regional advantage. Panama has been tipped as one of the frontrunners by sources in the region. Feasibility studies on the project have been executed by KBC Advanced Technologies, Incorporated (OTC:KBC) (Walton-on Thames, United Kingdom).

Mesoamerica as a region extends south and east from central Mexico to include parts of Central America. In addition to the hydrocarbons project, the PIEM aims to boost regional electricity generation and interconnectivity leading to a stabilization of energy prices. Mexican Energy Secretary Fernando Canales said that the new refinery will provide fuel at $8 less a barrel than open market prices.

Members of PIEM attending the summit were Belize, Colombia, Costa Rica, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and the Dominican Republic. In addition to the mega-project, the meeting covered the development of renewable energy sources, including ethanol from corn or sugar. This topic engaged the interest of sugar producing nations such as the Dominican Republic.

President Fox said that the process for the project from bidding to production will take several years. He said that regional energy integration needed cooperation and solidarity among democratic countries. The meeting did not budget for oil purchases, but following ‘La Romana Declaration’, a PIEM joint venture will be set up on August 31st, with the objective of managing Mexican oil supply quotas for the project at preferential prices.

The PIEM Summit at the beginning of June was followed in San Domingo by the 36th general assembly of the OAS (Organization of American States), with delegates consisting of foreign ministers, including those from Venezuela, Bolivia, Ecuador and the U.S., which was represented by Deputy Secretary of State Robert B. Zoellnik. There were 107 points on the agenda ranging from #4 - The question of the Malvinas Islands, #103 - Proposed extension of the Panama Canal by the construction of a third set of locks and # 107 - Support for renewable energy and energy security in the Hemisphere… to #15 - Right to the truth.

The theme of the OAS meeting was “Good Governance and Development in the Knowledge-based Society.’ Jose Miguel Insulza, secretary general of the OAS said, “My hope is that this assembly will disprove the stories in the international press that speak of division in Latin America and that, here in San Domingo, we will reassert our democratic convictions and our total allegiance to the principles of non-intervention and mutual respect that must guide our relations.”

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